We: How to Increase Performance and Profits through Full Engagement

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"I don't worry about an employee who complains. It shows they care. I worry about an employee who stops complaining." Rudy Karsan

Welcome to a Leadership Channel podcast on TotalPicture Radio, this is Peter Clayton reporting. Joining me today is Rudy Karsan, Chairman and CEO of Kenexa a global provider of business solutions for human resources. Karsan, along with Kevin Kruse, is the author of the New York Times best-selling book, "We: How to Increase Performance and Profits Through Full Engagement," Karsan and Kruse, (a serial entrepreneur, CEO of Kru Research), claim you can tell whether employees are engaged by how often they use the word 'We' (as opposed to 'they') when describing their employer. Hence the title of the book.

Using research from Kenexa - which conducts 10 million employee engagement/opinion surveys in over 150 countries each year - the authors reveal that there's a five-times greater difference in shareholder value between companies with the most engaged workers and those with the least. And if you think engagement just means happy employees; think again.

The book provides many "toolkits" (with links to forms and videos), and action steps to help managers maximize engagement, align employees to the organization's goals, show recognition, make employees feel valued and enhance teamwork, communication and product/service quality, among other things.

Program Transcript

Rudy Karsan - TotalPicture Radio Interview Transcript

Welcome to our Leadership Channel Podcast on TotalPicture Radio. This is Peter Clayton reporting. Joining me today is Rudy Karsan, the chairman and CEO of Kenexa, global provider of business solutions for human resources. Karsan, along with Kevin Kruse, is the author of the New York Times bestselling book We: How to Increase Performance and Profits through Full Engagement.

Rudy, thanks for joining us on TotalPicture Radio.

Rudy: Peter, it's a pleasure to be here.

Peter: Tell us about the back story about your book. How did you meet your co-author Kevin Kruse and what was the inspiration for writing this?

Rudy: Kevin and I got to know each other I would say almost 15 years ago. Kenexa bought his company and we worked together for a solid whatever seven, eight years. He then moved on to open a couple of other companies being a serial entrepreneur but we stayed in touch. Kevin and I had often talked about co-authoring a book way back in 2000, 2001, four or five and then a funny thing happened; my wife won the Fulbright fellowship and ended up taking a one year fellowship in Al Ain, which is in the United Arab Emirates. I'd go visit her there once every three weeks but I had a little bit of time on my hands and during that year, Kevin and I kind of put our heads together and out popped We.

Peter: Yeah, I would imagine. That's a pretty long flight, Rudy.

Rudy: Yes, about 14 hours each way. I've done it a number of times.

Peter: Your book, engagement is in the title of your book and you can tell that it's a huge factor in the profitability of most companies. Can you define for us what employee engagement is and also what it's not.

Rudy: Employee engagement basically at the core level allows human beings to perform better because of either they're driven by the purpose of the job they're doing, they're driven by the passion of the work that they love, they're driven by the growth opportunities. Really at the end of the day, the way we define engagement is growth in their careers, a sense of pride about the organization whether they do it by referring family and friends to come work there. It's a sense of satisfaction of being there.

What it's not is happy employees and a lot of times people confuse engagement and happiness and they view happiness as being sufficient for engagement. Happiness to me and engagement are two very different components. Generally, happiness is a mild subset of engagement.

Peter: In reading your book you have lots of statistics, lots of numbers to back up the fact that engaged employees make companies money. ☺

Rudy: Right.

Peter: Can you share some of these stats with us because they're fantastic.

Rudy: We have what's called a Kenexa High Performance Institute which is basically we have about five or six PhD's that look at data around the world in the science of human capital. Their basic job is to push forward the knowledge of human capital globally so that the relationship between the employer and the employee is enhanced. When you look at the data that they look at it consists of everything from work trends which are specifically design surveys that we run across almost a hundred thousand employees globally on a monthly or a quarterly basis depending on the type of things we're looking at to the almost a hundred million employee surveys that we have run throughout the organization with Kenexa's clients over the last few years.

One of the things that we were trying to tease out was what is the impact of profitability by engagement or does engagement not matter as far as profitability goes. When they look at our benchmark data it took us about three years worth of research and we were able to track it back on publicly held companies that the top 25% of engaged companies outperformed by every single financial metric the bottom 25% of engaged companies whether it was total shareholder return, whether it was earnings per share whether it was earnings growth, whatever metric you chose to look at, the companies in that top 25% outperformed the companies in the bottom 25%.

Peter: Well, that should get just about any CEO's interest, I would think and yet, there are still a lot of companies out there who have an attitude of we only hire low wage workers and they're just happy to have a job so they're engaged. Right?

Rudy: Yes, and I think what is happening there is there is a sense and it's a true sense by the way, Peter, that there are certain jobs that have a commodity nature to them which is the difference between a top performer and a medium performer is small enough that I can use employees in a replacement sense because my top performer is only 10% above my medium performer. It might be - pick an example - it might be the person standing on the assembly line. The skill level in that particular role is not a discriminator in performance.

Organizations that have a lot of jobs that have a minimum amount of variants in performance between the medium and the top tend to view their workforces as commoditized and therefore, they are easily replaceable. The reality of the situation is even when you have a 10% differential in skill performance, when you've got wages sitting at 56% of your total income statement, even a 5 percent move on that is a couple of percentage points of additional profit, and that's where organizations have to kind of start rethinking this paradigm.

There is a difference even in jobs that are heavily "replaceable" because very slight differences in performance can make material differences in employment costs because employment costs are for most organizations, the largest expense item on the profit and loss. You get a 10:1 or 15:1 impact on your earnings.

Peter: It seems to me even at an entry level or in unskilled labor level employee, having a huge churn in your organization, I mean there's a big cost in that.

Rudy: Replacement of any asset for any organization requires that organization to restart and even if you think of something as simple as I'm replacing a computer on my desk; the amount of time it takes to do that replacement might be 2 hours, plus maybe another 25 minutes of reloading my software. Even when I'm replacing a PC, I've got three hours of employee time that's necessary for that replacement.

Employee replacement is a lot more complex than a desktop PC replacement. If companies can start thinking about asset replacement costs in the way they sit on the profit and loss statement, that same analogy of replacing employees is extremely high, whether it is just the administrative aspects of kind of re-filing everything from base forms like I9's to your benefit forms to actually orienting the employee into the organization, and then even the mild amount of skills training that you need to do in kind of low skilled jobs, you're still looking at massive replacement costs.

Yeah, you're absolutely right, there is a cost and it's not an inconsequential cost; it is a pretty significant cost.

Peter: In your book you identify three common factors that keep employees engaged and productive. I'd like you to talk about those a little bit: 1. Growth 2. Recognition 3. Trust

It seems to me, Rudy that in this day and age of Twitter and Facebook and all the social networks out there, trust has really come to a new definition of what it's like to be in an organization and how that message gets delivered out there.

Rudy: I'll start with the trust then. You're entirely correct, the new definition of trust is changed to honest, open, two-way communication. The days of transmission are pretty well over. If you think about it for yourself personally, the people you trust the most as an individual have two components to it. One is they listen to me. The more people listen to me, the more likely I am to trust them because they're giving me the most important and valuable asset they have is their time. They wouldn't give me their time if they didn't value me and because they value me, I trust them.

The second thing is authenticity. In today's day and age there are so many layers to individuals and you see them from so many different facets, social media, kind of the CEO broadcasting over the company's YouTube equivalent, whatever that might be, the regular communiqués that come out of corporate, there is a falseness and a veneer around most of the communication because it's all staged.

The more authentic you can make your communication and the more you can listen, the higher your trust factor climbs. That's true for us as employees. It's true for us as consumers. It's true for us as in terms of personal relationships as well in today's day and age. If you're going to trust a person on a personal relationship there has to be a level of authenticity and they have to listen to you. It's not that you can just continually listen to them because then the trust disappears.

Does that make sense to you?

Peter: Yeah, absolutely.

Rudy: Growth is a very basic human need that emerges from the day we're born. It's like my grandfather taught me - The day you stop learning is the day you start dying. As human beings, we've only got two ways in which we live. We're either growing and learning or we're dying. There's no in between stage. You can't be kind of calcified and flatlined. There is no such stage in the human make up. And so the way engagement is driven is when you touch the growth gene.

Growth can take place in a number of different factors. It can be growth in experiential compensation, with job variation. It can be learning new things. It can be career growth in terms of promotions within an organization. I think in the past definition of growth it always meant you get promoted and you get a raise and that's how you define growth.

In today's day and age, growth is much more complex than that simple definition. The more organizations can tap into that, the better off they are. Recognition is the most underutilized tool that exists in the vast armory of kind of corporate communication and arsenal often organization in order to engage the employee.

Recognition is extremely powerful. When you ask people to tell you stories about their past, they will remember vividly particular situations that happened to them in their careers. They will not remember vividly the largest single paycheck increase they ever received. When you interview people over an extended period of time, nobody will refer to, "The most important day of my career is when I opened up that paycheck and saw my first 15% increase." They will not relate that story to you. I've never in the hundreds and thousands of interviews I've done and read, ever heard somebody say that. Recognition is heartfelt, sincere appreciation of the person's talents, their needs, their wants and their contribution to the organization.

Peter: I think you're so right. I think that is so often overlooked. One of the first things that gets cut during a recession like the one we've just been going through is all these employee recognition programs kind of go away, all of the training kind of goes away and those kinds of things which are so important.

Rudy: Yup, exactly. What's really interesting is there is a level of cynicism around it. You can have a key executive that says, "Bah, no one ever listens to recognition." It's kind of their view of the world.

Peter: Right.

Rudy: What I would suggest for companies to do and to kind of rethink this proposition is to say, "Look at my personal life and let me plot out my personal journey. What did recognition mean for me personally?" If you can personalize the discussion and the dialogue, I think that companies' viewpoints would change dramatically almost overnight because recognition is very personal. It is to an individual, from an individual. It doesn't necessarily mean that it is attached with large financial contributions of some sort nor does it mean that it has to be something that is put out there in lights but it does mean it has to be sincere and heartfelt and done by the right person. It's a very personalized experience.

Peter: For years, I did a show for Citibank called the Citibanking News Network and it was for the retail bank. Basically, what I would do is I would call up and interview someone in a branch who perhaps sold a million dollar CD or something and say, "Well Jane, how did you do that? What did you do to make that sale?" or whatever it happened to be. It was a great way of recognizing those employees who really stepped up and did exceptional work. It was really cool.

Rudy: Do you remember their responses and the reactions?

Peter: Oh yeah. They were just so proud to, first of all, have someone who actually recognized the contribution that they had just made and was interest in learning with how they went about doing it.

Rudy: It's amazing. I'll share a little story with you. Kenexa has been a around for a long time and I've been here since day one. One of the things that started about 15, 16, 17 years ago is every morning when you wake up you get a thought of the day from me. We started this when we were a company of 15 employees and it could be the words of a famous person or it could be some sort of a corporate missive or it could be a funny story or a YouTube interesting piece; it's a random collection of kind of a daily thought.

One of the things that I started to do about 12 months ago or so was at the bottom of it on an intimate basis; I put down Kenexa Spotlight where we spotlight a particular individual around the globe. It's sometimes a contribution from somebody somewhere around the world saying I'd like this person spotlighted, or it might be just somebody that I know and I've seen done something ultra special. What's very interesting is the heartfelt level of thank you and surprise when people get spotlighted on that particular day is just mindboggling. It's just absolutely mindboggling.

Peter: How much does that cost an organization to do it?

Rudy: It costs a few minutes of my time but it's well worth it.

Peter: Yeah.

Rudy: It's well worth it.

Peter: Absolutely. I don't know why more companies just don't do this kind of stuff.

Rudy: I often wondered about that too.

Peter: You know one of the things I really enjoy about your book is it's not just about all these big concepts around engagement but it really delves into helping individuals evaluate their own personal careers and with a lot of workbook kinds of things that they can do. You have a whole chapter on what you call Career Life Bulls Eye. Can you talk a little bit about that?

Rudy: In a lot of our research, what we found out was that at first we thought that the only thing that was important to people was pay and maybe recognition of some sorts. When we were doing this research over this very, very extended period of time, we realized that the common themes that came out of a lot of these discussions was there were three P's of that. The three P's of that were pay, purpose and passion.

How that came about was when we looked at what people claimed, self-acclaimed successful people as well as recognized successful people, the stories they told and probably Bill Gates is a great example of somebody in the early part of his career was very heavily involved in pay and passion. Made a lot of money for doing something he was passionate about. A new computer industry but he didn't feel that there was a purpose and went ahead and found the Bill and Melinda Gates Foundation and now it's kind of moved into that direction where he's doing things that are purposeful to humanity.

The key in these things is to ability to be able to serve, the ability to follow your dreams and the ability to have an economic engine so that you're not a net subtraction from the world at large and that you can take care of yourself.

Those are the three things that if individuals can touch upon, it's kind of like a Venn diagram; you will find that people have great careers based on that.

Peter: Let's talk a bit about culture. Tony Hsieh, the CEO of Zappos wrote the foreword to your book and I've interviewed Tony and I know how important he feels culture is. What's the culture like at Kenexa?

Rudy: We have what we call "Our Kenexa" which outlines the various things about Kenexa that's truth. We did a lot of research around it internally and I'll just give you a couple of examples. Like for example, Kenexa #5 is you're allowed to laugh your way through a problem. That doesn't mean we're not serious about our problems but we don't take ourselves too seriously. We take our jobs seriously but not ourselves.

Another one is extreme service means busting your butt for the client every day. We're extremely service oriented here and that passion that we have to make sure that our client is satisfied and ecstatic about their experience with Kenexa were put into an extreme service hierarchy, a model that we call Extreme Service. Those are the kinds of service that we think about and we talk about. I guess from my perspective, my favorite is #10 - Our calling is improving lives by what we do. In effect we're serving humanity because in the work that we do we can change the employer-employee relationship and we're highly focused around that so that's our contribution to humanity if you will.

Rudy: Yes, very much so because it's a short-lived journey, a very short-lived journey if they do that.

Peter: In your book, you described the 12 arch types of organizational culture and most of these terms are not what people would expect. I think it's a great way of going in and analyzing how you fit in to an organization and you're right. It is so important. I mean let's face it, how many hours do you spend to work everyday? You know?

Rudy: Right, and it also gives you language around which you can communicate that makes you feel pretty safe, right?

Peter: Right. One concept I really appreciate in your book is called the Personal Career Board. Can you tell us a little bit about that?

Rudy: When you really think about if you start at the basic, what are the most important things in people's lives? Their family and friends, the food that they eat, the careers that they're in and the faith, right? You've got kind of the faith, the food component, the family component and the career component. In all the other three areas, you have some sort of a guru so your family, your parents provide you teaching on how to become a good family member through their actions and through the way that they communicate to the world and their life.

From a faith perspective, you have an archbishop or you have a clergyman or you have a rabbi or you have an imam or whatever the case might be.

On the career side, we don't have career gurus. We don't have in today's world, people that can guide us who have already walked that path. In the old days when we had narrower job families, we used to have craftsmen and you would sit at the foot of the master and you would learn your craft. Today we don't have that and what we are proposing or what I'm suggesting in the book is change that. Have yourself a career board consisting of individuals that don't mind investing in you but have also walked that path. You can sit at their feet and learn from them. That will make you into a better X whatever that might be, a better writer, a better publisher, a better engineer and these individuals have that interest in your career and they are only focused on what it is that it means to you for the forwardment of your career, that laser sharp focus around your particular interest.

Peter: That makes sense. You advocate a career life blend sort of dispelling the myth of the career-life balance. Can you expand on that a little bit?

Rudy: Basically, I guess what we're really trying to say in the book there is if you look at historically, what happened was we worked in a world where careers or the work we did and the life we lived were intertwined. We were farmers and hunters. We would work a little bit, tend the farm, take a nap or go out there hunt an animal, get tired, go back into our cave and that's how the roots of humanity.

After the industrial revolution and the advent of unions for whatever reasons, good, bad or indifferent, whatever your views are, it doesn't matter, there was this partitioning and said, "Okay, you only work 40 hours a week and here are the 40 hours you worked." It's all prescribed because it all depended on that assembly line. We used that assembly line concept to differentiate between our work and our rest and the balance of our life.

What we are proposing is that strict breakdown between work and life which has been true is now changing because of the way we work is so intertwined in all aspects of everything that we do, we can sit at work and shop online during our lunch break. If we can do it during our lunch break, why can't we do it at 10:00 in the morning? That's what we're referring to when we talk about a work life blend. It all kind of merges together and the whole idea is to maximize that rather than artificially separate it and try and create a balance because the energy to create a balance is and can be extremely difficult for an individual because it's an unnatural format. Life isn't about balance. Life is about growth and maximization. If you could have a slightly different view which you say it all comes together and accept it and not going to battle it then why don't I just figure out a way to pull everything in together and maximize whatever it is I'm currently doing and that's what the book really tries to force.

Peter: Yeah, I think that that makes so much sense and you're so right. I mean in today's world, you really have to blend your work life with your family life and your personal life because that's the only way you can do it without going crazy, right?

Rudy: Before we started this interview, you said two very, what I thought were very powerful words. When I asked you how this radio show worked, you used the words time shift.

Peter: Right.

Rudy: Because my audience can do a time shift. I thought about it while you were talking and through the interview and I thought what a smart way to describe how we live our lives, and that that time shift that you're referring to, Peter, really is that work life blend. I am now listening to this interview which is kind of related to my work and maybe or maybe not but I'll do it on my own time when I want to. It might be during my free time, my traditional what I consider my free time. That's work life blend. Your listeners are experiencing it as we speak because of what you have done with time shift.

Peter: What did you learn in writing We?

Rudy: That writing a book is the single most difficult thing I've ever done in my life. It was excruciatingly difficult. To be able to put your thoughts in an organized fashion and in a manner that is of interest of anyone out there is very, very, very difficult.

Peter: I think the product was certainly worth the effort. Thank you so much.

Rudy: Thank you very much. I appreciate the kind words.

Peter: Thank you for taking time to speak with us today on TotalPicture Radio.

Rudy: Pleasure was all mine. You take care.

Peter: You too.

Rudy Karsan is the chairman and CEO of Kenexa and the author of the New York Times bestselling book We: How to Increase Performance and Profits through Full Engagement published by Wiley. You'll find this podcast in the Leadership Channel of TotalPicture Radio. That's TotalPicture.com. While there, please sign up for our newsletter and remember you can subscribe to our program on iTunes. Just do a keyword search for TotalPicture Radio and join me on Twitter@PeterClayton. Our interviews can link your company with clients, prospects, employees and passive candidates.

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About Peter Clayton

Peter Clayton, Producer/Host, is an award-winning producer/director of radio, television, documentary, video, interactive and Web-based media who has created breakthrough media for a wide array of Fortune 100 clients.

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